Microsoft has announced commercial pricing increases for the 365 lines of products named as New Commerce Experience (NCE). The new Microsoft 365 pricing model will go into effect on March 1, 2022. Customers using monthly subscriptions will see the latest prices reflected in their March invoices. Organizations can lock in prices through annual or multi-year licenses and avoid paying monthly surcharges. Managed Service Providers (MSPs) have no negotiating power over the price hikes. So, it is crucial to evaluate your business requirements and priorities as soon as possible to determine the best option for your organization.
Details of the Pricing Changes
Microsoft is increasing the prices globally on March 1, 2022, but specific local markets might see adjustments. The pricing changes are as follows:
|Product||Current Price||New Price||Increase|
|Microsoft 365 Business Basic||$5.00||$6.00||20%|
|Microsoft 365 Business Premium||$20.00||$22.00||10%|
|Office 365 E1||$8.00||$10.00||25%|
|Office 365 E3||$20.00||$23.00||15%|
|Office 365 E5||$35.00||$38.00||9%|
|Microsoft 365 E3||$32.00||$36.00||13%|
** Prices are listed per user.
The price increases will only affect small businesses (SMBs) and enterprises. Users in the education sector will not see any changes.
Currently, Microsoft charges the same price for monthly and annual subscriptions. However, from March 2022, Microsoft will charge a 20% premium for month-to-month subscriptions over annual ones. Month-to-month customers will see an additional price hike for the services on top of the above price increases. Microsoft is also introducing multi-year licenses to allow customers to lock in lower prices. These initiatives are designed to motivate customers to adopt annual subscriptions.
Price Increase Comes After a Decade of Microsoft Value Adds
Microsoft introduced Office 365 in June 2011, which brought the Office suite of products to the cloud. In 2017, Microsoft 365 was the next leap forward that combined the power of Office, Windows, and Enterprise Mobility & Security (EMS).
Since 2011, Microsoft has added 25 apps to Microsoft 365, including Teams, Access, OneDrive, OneNote, SharePoint, Skype for Business, To-Do, Visio, and more.
It has also released 1400 new capabilities. Some popular capabilities are:
- Communication and Collaboration: Together Mode, Custom Backgrounds, 250-people group chat capability, Whiteboard, real-time collaboration in Word/Excel/PowerPoint, etc.
- Security and Compliance: Data Loss Prevention (DLP) for emails and documents, message encryption, MFA, eDiscovery, etc.
- AI and Assistance: Stream Auto video transcription and face detection, Live captions and subtitles, Editor in Word, Designer in PowerPoint, Natural language query in Excel, etc.
In the new pricing model, audio conferencing will see a significant change. Currently, the unlimited dial-in option is free only in E5 suites. Starting March 2022, unlimited dial-in will be available across Microsoft 365 Business Basic/Business Premium, Microsoft 365 E3/F3, and Office 365 E1/E3/F3. The service is available across 70+ countries with 44 languages and dialects. It means users can dial in to join Team meetings worldwide from any location or device.
However, the Microsoft 365 license prices have remained the same during the decade-long continuous improvements.
Evaluating Your Next Steps
As mentioned, Interactive AV-IT and other managed service providers (MSPs) lack the authority for price negotiation with Microsoft. The price mandate is a global Microsoft initiative that will affect businesses worldwide.
An important point to remember with an annual subscription is that you can add new users during the subscription term, but you cannot remove users until the period ends. If your business has regular employee turnover due to a high number of seasonal or contract workers, then it might make sense to stay on a month-to-month subscription and pay the extra 20% premium.
However, some businesses will benefit from moving to an annual subscription. Then you would not have to pay 20% monthly surcharges. Also, in case of another price hike, you will be guaranteed the current price until the end of the annual subscription term.
Here are current promotions to help with transition:
- Jan-End of March => Get annual commitments at 5% discount
- Jan-Feb 28th => Lock in existing rates for a year with annual commitment
- Jan-end of June => Monthly New Commerce Experience (NCE) subscriptions are at annual rates (Meaning no 20% premium)
- Mar 1 => Prices increases on 6 SKUs (Biz Basic, Biz Prem, E1, E3, E5, M365 E3)
- March 10th => All net new subscriptions move to NCE
- July 1 => All new and existing subscriptions have to transact through NCE. Monthly subscriptions go to 20% premium over annuals